Closing pay gaps to reach pay equality

Pay equality is more topical than ever, and with the upcoming deadline for publishing the first gender pay gap reports (4 April 2018), many businesses will be considering how best to tackle gender pay imbalances within their organisation.

The Equalities and Human Rights Commission (EHRC) recently published a strategy for tackling pay gaps caused not just by gender, but also ethnicity and disability. This is a prompt for employers that there is no time like the present to consider all potential pay gaps in their workforce and take steps to close them.

The average ethnic minority pay gap is currently 5.7% and the disability pay gap is 13.6%. These sit behind the gender pay gap, currently at 18.1%, but the averages disguise a number of significantly higher figures with some groups experiencing far greater pay disparity than others. Gender is not the only factor affecting pay imbalance across equivalent roles.

The EHRC's report concludes that the reasons behind pay imbalances are multiple and complex. Poor educational opportunities, an individual's "choice" to work part time (which may be dictated by stereotypes), and regional variation in the availability of intermediate jobs all play a role.

Whilst gender pay reporting is expected to pressure employers to take steps towards salary alignment, the EHRC recognises that reporting will only go so far. The EHRC's position is that a more general shake up is needed. Its key recommendations include:

Advertising all jobs with part time and flexible working, unless there is a genuine business reason why this could not be done. Part time working is currently predominantly available for low paid, low skilled work. Women, disabled people and ethnic minorities are over-represented in part time roles, contributing to those pay gaps.

Offering parental leave on a "use it or lose it" basis and paid at a reasonable rate in order to encourage fathers to share more responsibility for childcare and to reduce workplace bias towards mothers being the primary carers. The current statutory paternity pay and statutory shared parental pay rates do not incentivise fathers to take this leave.

Voluntary reporting by smaller employers (who do not currently fall within the regulations) of their gender pay gap, and voluntary reporting by all employers of their ethnic minority and disability pay gaps. However, given the negligible uptake by employers of voluntary gender pay gap reporting (prior to the regulations coming into force) it is somewhat unlikely that this will happen, particularly with the public backlash from the BBC's pay reporting still ringing in the public's ears. There may yet be mandatory reporting on ethnicity and disability pay gaps in the years to come, however; the EHRC has recommended consulting with employers about this.

On 28 August the government launched a scheme to help career break returners in the public sector. The motivation is to make it "routine" for women to go back to work after career breaks (typically taken for childcare reasons) thereby reducing the gender pay gap. The scheme will only apply to teachers, health care workers, civil servants and social workers in the first instance but no doubt its success will be monitored with a view to a possible extension to the private sector.

It is clear that the gender pay gap is an important political issue and there are steps being taken to tackle it. It is equally clear that there is still a lot of work to be done before this and other pay gaps are eradicated, which will only be achieved with changes in culture. Judging by past experience, change is likely to be slow in the absence of government intervention. However, businesses should stay ahead of the game by seizing the opportunity presented by gender pay gap reporting to assess their ethnicity and disability pay gaps and to consider how salaries can be aligned to achieve fair remuneration.

We look forward to seeing you and taking your views on this important topic.

Contributor: Hayley Butler

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.